STUDY ON

ASSET LIABILITY MANAGEMENT

of
IDFC FIRST BANK
at
NIZAMABAD, TELANGANA

SUBMITTED IN PARTIAL FULFILLMENT FOR THE

AWARD OF THE DEGREE OF

BACHELOR OF BUSINESS ADMINISTRATION

(FINANCE)

SUBMITTED
BY

Mr: MOHAMMED ABDUL RAQEEB

(HT. No:21055022681034)

Submitted to
TELANGANA UNIVERSITY
Dichpally, Nizamabad-503001. T.S

(2021-2024)
 DECLARATION

I Mohammed Abdul Raqeeb hereby declare that the project work entitled
study of “ASSET LIABILITY MANAGEMENT OF IDFC BANK” That is being
submitted by me in partial fulfillment of the requirement for the award of the degree of
BACHELOR OF
BUSINESS ADMINISTRATION in FINANCEfrom TELANGANA UNIVERSITY is
a
bonafide work undertaken by me. The result embodied in this dissertation has not been
submitted to any university or institution for the award of any degree or diploma.

DATE: Mohammed Abdul Raqeeb

PLACE: NIZAMABAD (HT. No: 210550226841034)
 ACKNOWLEDGEMENT

This work is a synergistic product of many minds. I am grateful for the inspiration
and wisdom of all those who were there with me in this journey.
I would like to express my immense gratitude and sincere thanks to,Mr. DR.
OSMAN MUBARRAK SHAIK Honorable Director, Mrs. DR. K. SWAPNA Honorable
Principal, Mr.
G. ANIL KUMAR, Head of the Department and supervisor Mrs. C. SHAILAJA and
Librarian Mr. P. CHANDHANSINGH for their valuable suggestions and encouragement
in completing the project within the stipulated time from the bottom of my heart.
I would like to express my thanks to all other respected faculties of the
management department for their assistance and co-operation given to me.
I thank my parents, family members and friends for their valuable support in
completion
of this project.
Finally, I would like to thank the people who have directly or indirectly helped me
in completing the project.

Thanking all,

Mohammed
Abdul Raqeeb

(HT. No.
210550226841034)
 ABSTRACT

Asset Liability Management (ALM) can be termed as a risk management technique designed to earn an
adequate return while maintaining a comfortable surplus of assets beyond liabilities. It takes into consideration
interest rates, earning power, and degree of willingness to take on debt and hence is also known as Surplus
Management. But in the last decade the meaning of ALM, which was actually pioneered by financial
institutions and banks, are now widely being used in industries too. The Society of Actuaries Task Force on
ALM Principles, Canada, offers the following definition for ALM: “Asset Liability Management is the on-
going process of formulating, implementing, monitoring, and revising strategies related to assets and liabilities
in an attempt to achieve financial objectives for a given set of risk tolerances and constraints.” The Housing
Development Finance Corporation Limited (IDFC)and to calculate the growth and performance by using asset
and liability management. And to know the management of non-performing assets. To know financial position
of the Housing Development Finance Corporation Limited (IDFC). The burden of the risk and its costs are
both manageable and transferable. Financial service firms, in the addition to managing their own risk, also sell
financial risk management to others.
 TABLE OF CONTENTS

CHAPTER
CONTENTS PAGE. NO.
NO.

LIST OF TABLES

LIST OF CHARTS

INTRODUCTION AND REVIEW OF

I 1-13
LITERATURE

INDUSTRY PROFILE AND COMPANY

II 14-32
PROFILE

III DATA ANALYSIS AND INTERPRETATION 33-47

FINDINGS, SUGGESTIONS &

IV 48-51
CONCLUSION

BIBLIOGRAPHY 52-53
 LIST OF TABLES

TABLE TITLE PAGE NO.

NO.

3.1 TABLE SHOWING STRUCTURAL LIQUIDITY 36

STATEMENT OF 2018

3.2 TABLE SHOWING STRUCTURAL LIQUIDITY 38

STATEMENT OF 2019

3.3 TABLE SHOWING STRUCTURAL LIQUIDITY 40

STATEMENT OF 2020

3.4 TABLE SHOWING STRUCTURAL LIQUIDITY 42

STATEMENT OF 2021

3.5 TABLE SHOWING STRUCTURAL LIQUIDITY 44

STATEMENT OF 2022

3.6 PROFIT AND LOSS A/C OF IDFC BANK LTD FROM 2018 TO 46
2022

3.7 BALANCE SHEET OF IDFC BANK LTD FROM 2018 TO2022 47

 LIST OF CHARTS

CHART TITLE PAGE

NO.
NO.

3.1 FIGURE SHOWING GAP ANALYSIS OF 2018 37

3.2 FIGURE SHOWING GAP ANALYSIS OF 2019 39

3.3 FIGURE SHOWING GAP ANALYSIS OF 2020 41

3.4 FIGURE SHOWING GAP ANALYSIS OF 2021 43

3.5 FIGURE SHOWING GAP ANALYSIS OF 2022 45

 CHAPTER – I

INTRODUCTION
&
REVIEW OF LITERATURE
CHAPTER – II

INDUSTRY PROFILE
&
COMPANY PROFILE
 CHAPTER – III

DATA ANALYSIS
&
INTERPRETATION
 CHAPTER – IV

FINDINGS, SUGGESTIONS

& CONCLUSION
BIBLIOGRAPHY
 ASSET LIABILITY MANAGEMENT

INTRODUCTION OF THE STUDY

Asset Liability Management (ALM) is a strategic approach of managing the balance

sheet dynamics in such a way that the net earnings are maximized. This approach is
concerned with management of net interest margin to ensure that its level and riskiness
are compatible with the risk return objectives of the IDFC bank limited.
If one has to define Asset and Liability management without going into detail
about its need and utility, it can be defined as simply “management of money” which
carries value and can change its shape very quickly and has an ability to come back to its
original shape with or without an additional growth. The art of proper management of
healthy money is ALM.
The Liberalization measures initiated in the country resulted in revolutionary changes in
the sector. There was a shift in the policy approach of from the traditionally administered
market regime to a free market driven regime. This has put pressure on the earning
capacity of co-operative, which forced them to foray into new operational areas thereby
exposing themselves to new risks.
As major part of funds at the disposal of come from outside sources, the
management is concerned about risk arising out of shrinkage in the value of asset, and
managing such risks became critically important to them. Although co-operative is able
to mobilize deposits, major portions of it are high-cost fixed deposits. Maturities of these
fixed deposits were not properly matched with the maturities of assets created out of
them. Asset liability management is a portfolio management of assets and liability of an
organization. This is a method of matching various assets with liabilities on the basis of
expected rates of return and expected maturity pattern.
In the context of ALM is defined as “a process of adjusting liability to meet loan
demands, liquidity needs and safety requirements”. This will result in optimum value of
the, at the same time reducing the risks faced by them and managing the different types
of risks by keeping it within acceptable levels.

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OBJECTIVES OF THE STUDY

The following are the objectives of the proposed study:

• To understand the problems involved in maintaining and managing assets and liabilities.

• To determine the financing pattern of the assets and to study process of CASH INFLOWS
and OUTFLOWS at IDFC bank.
• To study the gap analysis of IDFC Bank

• To analyze the structural liquidity rate.

NEED OF THE STUDY

The need of the study is to concentrate on the growth and performance of IDFC Banks and to
calculate the growth and performance by using asset and liability management and to know
the management of non-performing assets.

• The prime importance of the study is to know financial position of bank and analyze the
maintenance of asset and liability.
• To improve the performance of bank and to analyze competition between IDFC Bank
with other cooperatives.
• To have practical knowledge of asset and liability management in the company.
• The findings of the study can be used as secondary data for the various future study
purposes.

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RESEARCH METHODOLOGY

The study of ALM Management is based on two factors.

• Primary data collection.

• Secondary data collection

PRIMARY DATA COLLECTION:

Primary data: - The primary data is the data which is collected, by interviewing directly with
the organizations concerned executives. This is the direct information gathered from the
organization., But in this project No primary data is used.
SECONDARY DATA COLLECTION:

Collected from books regarding, journal, and management containing relevant information about
ALM and Other main sources were
• Annual report of the IDFC BANK LIMITED

• Published report of the IDFC BANK LIMITED

• RBI guidelines for ALM.

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SCOPE OF THE STUDY

In this study the analysis based on ratios to know asset and liabilities management under
IDFC Bank and to analyze the growth and performance of IDFC Bank by using the calculations
under asset and liability management based on ratio. It has the purpose of formulating strategies,
directing actions and monitoring implementation thereof for shaping the bank’s balance sheet that
contributes to attainment of the bank’s goals. The study is limited for 5years i.e., 2017-2021.

LIMITATIONS OF THE STUDY

The following are the limitations of the proposed study:

• This study is based on Secondary Data derived from published annual reports of the selected

units. Their liabilities and findings are dependent upon the data published in annual report.

• The study is limited to five years only. The study is related to the Indian banking sector.

• The study is aimed to be completed in a short period of time due to which we may not be able
to provide all the required data.
• Information relating to the internal aspects regarding various items may not be provided for
security reasons; it may result in limitation in the proposed study.

TOOLS FOR DATA ANALYSIS

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• Return on assets (ROA) is a financial ratio that shows the percentage of profit a
company earns in relation to its overall resources. It is commonly defined as net income
divided by total assets.
Net Income

Return on assets (ROA) ═ ------------------------------

Average total assets

• Return on equity (ROE) is a measure of the profitability of a business in relation to the

equity, also known as net assets or assets minus liabilities. ROE is a measure of how
well a company uses investments to generate earnings growth.
Net Income

Return on equity (ROE) ═

Average stockholders’ equity

• Return on common equity ratio (ROCE) reveals the amount of net profit that could
potentially be payable to commonstockholders.
Net Income

Return on common equity ═

Average common stockholder’s equity

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ASSET LIABILITY MANAGEMENT (ALM) SYSTEM

ALM among other functions, is also concerned with risk management and provides a
comprehensive and dynamic framework for measuring, monitoring and managing liquidity interest
rate, foreign exchange and equity and commodity price risk of that needs to be closely integrated
with the business strategy. It involves assessment of various types of risks altering the asset liability
portfolio in a dynamic way in order to manage risks.
The initial focus of the ALM function would be to enforce the risk management discipline, viz., and
managing business after assessing the risks involved.
In addition, the managing the spread and riskiness, the ALM function is more appropriately viewed
as an integrated approach which requires simultaneous decisions about asset/liability mix and
maturity structure.

RISK MANAGEMENT IN ALM

Risk management is a dynamic process, which needs constant focus and attention. The idea of risk
management is a well-known investment principle that the largest potential returns are associated
with the riskiest ventures. There can be no single prescription for all times, decisions have to be
reversed at short notice, which is often used to mean uncertainty, creates both opportunities and
problems for business and individuals in nearly every walk of life.

Risk sometimes is consciously analyzed and managed, other times risk is simply ignored, perhaps out
of lack of knowledge of its consequences. If loss regarding risk is certain to occur, it may be planned
for in advance and treated as to definite, known expense. Businesses and individuals may try to avoid
risk of loss as much as possible or reduce its negative consequences.
Several types of risks that affect individuals and businesses were introduced, together with ways to
measure the amount of risk. The process used to systematically manage risk exposure is known as

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RISK MANAGEMENT. Whether the concern is with a business or an individual situation, the same
general steps can be used to systematically analyze and deal with risk.

STEPS IN RISK MANAGEMENT

• Risk identification
• Risk evaluation
• Risk management technique
• Risk measurement
• Risk review decisions

Integrated or enterprise risk management is an emerging view that recognizes the importance of risk,
regardless of its source, in affecting a firm ability to realize its strategic objectives. The detailed risk
management process is as follows;

Risk Identification:

The first step in the risk management process is to identify relevant exposures to risk. This step is
important not only for traditional risk management, which focuses on uncertainty of risks, but also
for enterprise risk management, where much of the focus is on identifying the firm’s exposures from
a variety of sources, including operational, financial, and strategic activities.
Risk Evaluation:

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For each source of risk that is identified, an evaluation should be performed. At this stage,
uncertainty of risks can be categorized as to how often associated losses are likely to occur. In
addition to this evaluation of loss frequency, an analysis of the size, or severity, of the loss is
helpful. Consideration should be given both to the most probable size of any losses that may
occur and to the maximum possible losses that might happen.

Risk Management Techniques:

The results of the analyses in secondstep are used as the basis for decisions regarding ways to handle
existing risks. In some situations, the best plan may be to do nothing. In other cases, sophisticated
ways to finance potential losses may be arranged. The available techniques for managing risks are
GAP Analysis, VAR Analysis, Heinrich Domino theory etc., with consideration of when each
technique is appropriate.

Risk Measurement:

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Once risk sources have been identified it is often helpful to measure the extent of the risk that exists.
As part of the overall risk evaluation, in some situations it may be possible to measure the degree of
risk in a meaningful way. In other cases, especially those involving individual computation of the
degree of risk may not yield helpful information.

Risk Review Decisions:

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Following a decision about the optimal methods for handling identified risks, the business or
individual must implement the techniques selected. However, risk management should be an ongoing
process in which prior decisions are reviewed regularly. Sometimes new risk exposures arise or
significant changes in expected loss frequency or severity occur. The dynamic nature of many risks
requires a continual scrutiny of past analysis and decisions.

RISK MANAGEMENT IN IDFC BANK LTD

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They were required by the to introduce effective risk management systems to cover Credit risk,
market risk and Operations risk on priority.
Narasimhan committee II,advised to address market risk in a structured manner by adopting Asset
and Liability Management practices with effect from April 1st 2089.

Asset and liability management (ALM) is “the Art and Science of choosing the best mix of assets for
the firm’s asset portfolio and the best mix of liabilities for the firm’s liability portfolio”. It is
particularly critical for Financial Institutions.

For a longtime I was taken for granted that the liability portfolio of financial firms was beyond the
control of the firm and so management concentrated its efforts on choosing the asset mix. Institutions
treasury department used the funds provided by deposits to structure an asset portfolio that was
appropriate for the given liability portfolio.

With the advent of Certificate of Deposits (CDs), had a tool by which to manipulate the mix of
liabilities that supported their Asset portfolios, which has been one of the active management of
assets and liabilities.

Asset and liability management program evolve into a strategic tool for management, the main
elements of the ALM system are:
• ALM INFORMATION.

• ALM ORGANISATION.

• ALM FUNCTION.
ALM INFORMATION

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ALM is a risk management tool through which Market risk associated with business are
identified, measured and monitored to maintain profits by restructuring Assets and Liabilities. The
ALM framework needs to be built on sound methodology with necessary information system as back
up. Thus, the information is key element to the ALM process.
There are various methods prevalent worldwide for measuring risks. These range from the simple
Gap statement to extremely sophisticate and data intensive Risk adjusted profitability measurement
(RAPM) methods. The central element for the entire ALM exercise is the availability of adequate
and accurate information.

However, the existing systems in many Indians do not generate information in manner required for
the ALM. Collecting accurate data is the biggest challenge before the, particularly those having wide
network of branches, but lacking full-scale computerization.
Therefore, the introduction of these information systems for risk measurement and monitoring has to
be addressed urgently.
The large network of branches and the lack of support system to collect information required for the
ALM which analysis information on the basis of residual maturity and behavioral pattern, it would
take time florin the present state to get the requisite information.

ALM ORGANISATION

Successful implementation of the risk management process requires strong commitment on the part
of senior management in the to integrate basic operations and strategic decision making with risk
management. The Board of Directors should have overall responsibility for management of risk and
should decide the risk management policy of the, setting limits for liquidity, interest rate, foreign
exchange and equity/price risk.
The Asset Liability Management Committee (IDFC BANK LTD) consisting of the senior
management, including CEO/CMD should be responsible for ensuring adherence to the limits set by
the Board of Directors as well as for deciding the business strategy of the in line with the budget and
decided risk management objective.
The ALM support group consisting of operation staff should be responsible for analyzing,
monitoring

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and reporting the risk profiles to the IDFC BANK LTD. The staff should also prepare forecasts
showing the effects of various possible changes in market condition related to the balance sheet and
recommend the action needed to adhere to internal limits,

The IDFC BANK LTD is a decision-making unit responsible for balance sheet planning from a risk-
return perspective including the strategic management of interest rate and liquidity risks. Each has to
decide on the role of its IDFC BANK LTD, its responsibility as also the decision to be taken by it.
The business and risk management strategy of the should ensure that the operates within the limits /
parameters set by the Board. The business issues that an IDFC BANK LTD would consider inter alia,
will include product pricing for deposits and advances, desired maturity profile and mix of the
incremental Assets and Liabilities, etc. in addition to monitoring the risk levels of the IDFC BANK
LTD should review the results of and progress in implementation of the decisions made in the
previous meetings. The IDFC BANK LTD would also articulate the current interest rate view of the
and base its decisions for future business strategy on this view. In respect of this funding policy, for
instance, its responsibility would be to decide on source and mix of liabilities or sale of assets.
Towards this end, it will have to develop a view on future direction of interest rate movements and
decide on fundingmixes between fixed vs. floating rate funds, wholesale vs. retail deposits, Money
markets vs. Capital market funding, domestic vs. foreign currency funding etc. Individual will have
to decide the frequency for holding their IDFC BANK LTD meetings.

ALM ORGANIZATIONconsists of following categories:

• ALM BOARD
• IDFC BANK LTD
• ALM CELL
• COMMITTEE OF DIRECT

ALM Board

The Board of management should have overall responsibility for management of risk and
should decide the risk management policy of the and set limits for liquidity and interest rate
risks.

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IDFC BANK LTD

The has constituted an Asset- Liability committee (IDFC FIRST BANKLTD). The committee may
consist of the following members.
• General Manager

• Head of Committee

• General Manager (Loans & Advances) Member

• General Manager (CMI & AD) Member

• AGM / Head of the ALM Cell Member

The IDFCBANK LTD is a decision-making unit responsible for ensuring adherence to the limits set
by board as well as for balance sheet planning from risk return perspective including the strategic
management of interest rate and liquidity risks, in line with and decided risk management objectives.
The Business issues that an IDFC BANK LTD would consider interiliac, will include fixation of
interest rates for both deposits and advances, desired maturity profile of the incremental assets and
liabilities etc.
The IDFCBANK LTD would also articulate the current interest rate due of the and base its decisions
for future business strategy on this view. In respect of funding policy, for instance, its responsibility
would be decided on source and mix of liability. Individual will have to decide the frequency for
their IDFCBANK LTD meetings. However, it is advised that IDFC BANK LTD should meet at least
once in a fortnight. The IDFC BANK LTD should review results of and process in implementation of
the decisions made in the previous meetings

ALM Cell

The ALM desk / cell consisting of operating staff should be responsible for analyzing, monitoring
and reporting the profiles to the IDFC BANK LTD. The staff should also prepare forecasts
(simulations) showing the effects of various possible changes in market conditions related to the
balance sheet and recommend the action needed to adhere to internal limits.

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Committee Of Directors

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They should also constitute professional, management and supervisory committee, consisting of three
to four directors, which will oversee the implementation of the ALM system, and review it’s
functioning periodically.
ALM FUNCTION
The scope of ALM function can be described as follows:

• Liquidity Risk Management

• Interest Rate Risk Management
• Currency Risk Management
• Settlement Risk Management
• Basis Risk Management

The RBI guidelines mainly address Liquidity Risk Management and Interest Rate Risk Management.

REVIEW OF LITERATURE FROM ARTICLES

Dr. Anurag b Singh; Ms. Priyanka Tandon (2012) Asset-Liability Management

(ALM) is one of the important tools of risk management in commercial banks of India.
The banking industry of India is exposed to number of risks prevailed in the market. The
research paper discusses about issues in asset liability management.

Mr. Chetan Shetty1 Ms. Pooja Patel 2, Ms. Nandini3 (2016) Assets and Liability
Management (ALM) is a systematic and dynamic process of planning, organizing,
coordinating and controlling the assets and liabilities or in the sense management of A
Study on Asset Liability Management in Indian Bank 3 balance sheet structure in such a
way the net earnings from interest are maximized within the overall risk preference of
the banks. This study examined the effect of ALM on the Five Private Sector Banks
profitability in Indian financial market by using Gap Analysis and Ratio Analysis

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Technique. The finding from the study revealed that banks have been exposed to liquidity
risk.

Kumar, (2014), studied on research, the most important factor which banks required to
manage now days is liquidity. This study analyzed short term liquidity and maturity gap
of the banks in order todecreases risk in banking sector. This survey helps banks to
reduce the risk which is very essential for all financial institution in India.

Petraityte (2013) states that ALM is a tool that combines several bank portfolios - asset,
liabilities, and the difference between the banks received and interest paid by the bank.
The main ALM purpose is to connect different bank activities into a single unit,
facilitating liquidity and balance sheet management.

INTRODUCTION

A financial institution is a money related foundation and a budgetary mediator that acknowledges
shops and channels those stores into loaning sports, both without a moment's put off through
advancing or not directly by capital markets. A money related organization associates clients which
have capital shortages to customers with capital surpluses.

Because in their effect inside a monetary device and a economic framework, banks are commonly
recognizably managed in maximum severe nations. Most banks paintings underneath a system
alluded to as partial keep managing an account where-in they keep up only a touch keep of the
property saved and loan out the unwinding for money. They are commonly fear to insignificant
capital stipulations which may be essentially in light of a worldwide arrangement of capital
requirements, called the Basel Accords.

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The maximum seasoned cash associated status quo in any case in life is Monte Dei Paschi di Siena,
organized in Siena, Italy, which has been operating continually given that 1872. It is trailed via
utilizing Berenberg Bank of Hamburg (1990) and SverigesRiksbank of Sweden (1868).

INDUSTRY PROFILE

HISTORY

Managing an account inside the present feeling of the expression is probably followed to medieval
and early Renaissance Italy, to the properly off cities in the north like Florence, Venice and Sialkot
Genoa. The Bardi and Peruzzi households dominated dealing with an account in fourteenth century
Florence, constructing up branches in a extensive range of parts of Europe. A standout amongst the
most clearly understood Italian banks become the Medici Bank, installation via utilizing Giovanni di
Bicci de' Medici in 1797. The most punctual recognized state store cash associated organization,
Banco di San Giorgio (Bank of St. George), wind up it appears that evidently located in 1813 at
Genoa, Italy.

DEFINITION
The meaning of a cash related organization fluctuates from USA to see the crucial USA Page (below)
for more information.

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Under English normal control, a financier is portrayed as any individual who consists of at the
enterprise challenge of saving money, this is unmistakable as:
• undertaking contemporary bills for his customers,

• paying tests drawn on him/her, and

• amassing assessments for his/her clients.

In greatest no longer a typical manipulate purviews there is a Bills of Exchange Act that classifies the
course as some distance as arguable units, collectively with checks, and this Act contains of a
statutory meaning of the time period financier: investor comprises of an edge of people, no matter
whether consolidated or now not, who bear on the enterprise mission of saving money' (Section 2,
Interpretation). In spite of the truth that this definition appears round, it's miles maximum in all
likelihood all the way down to earth, as it ensures that the lawful purpose for bank exchanges
including assessments does not depend on how the financial institution consists or managed.

The mission of handling an account is in numerous English now not ordinary course global regions
by no means again characterized with the aid of statute but thru traditional manage, the definition
above. In other English not unexpected manipulate wards there are statutory meanings of the matter
of coping with an account or preserving money commercial enterprise. While searching at the ones
definitions it's far crucial to bear in mind the way that they may characterize the problem of
maintaining cash for the elements of the law, and no longer normally in preferred. In particular,
maximum severe of the definitions are from path that has the motivations in the back of access
coping with and overseeing banks rather than controlling the real commercial enterprise of keeping
money. In any case, in most cases the statutory definition eagerly reflects the ordinary regulation one.
Cases of statutory definitions:

"Banking Enterprise" manner the problem of accepting cash on modern or keep account, payingand
amassing checks drawn with the aid of or paid in through techniques for clients, the making of
advances to clients, and carries such amazing business task in mild of the reality that the Authority
may additionally moreover propose for the factors of this Act; (Banking Act (Singapore), Section 2,
Interpretation).

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• "Banking Enterprise Venture" technique the commercial enterprise assignment of either or

each of the accompanying:

1. Receiving from a massive portion of the overall populace coins on modern-day, store, cash related
reserve budget or various comparative file repayable available to come back returned to work for or
inner underneath [3 months] ... Or, on the other hand with a duration of name or see of now not as lots
as that time period.
2. Paying or accumulating tests drawn by using or paid in through clients. Since the technique of
EFTPOS (Electronic Funds Transfer at Point of Sale), coordinate credit score, coordinate price and
internet retaining money, the test has lost its strength in maximum managing an account structure as a
fee machine.

This has pushed banks to demonstrate that the take a look at based totally definition have to be
widened to incorporate monetary foundations that lead cutting edge coins owed for clients and allow
customers to pay and be paid by means of third events, no matter whether they do never again pay
and obtain checks.

SAVING MONEY

Banks move approximately as fee advertisers by way of taking component in checking or front line
represents customers, paying appraisals drawn via customers at the bank, and assembling reviews
saved to clients' present data. Banks moreover empower consumer charges thru other price strategies
which includes Automated Clearing House (ACH), Wire exchanges or transmitted transfer, EFTPOS,
and programmed teller framework (ATM).

Banks acquire cash through tolerating spending plan saved on current cash owed, by using tolerating
term stores, and through techniques for issuing obligation securities which includes banknotes and
securities. Banks mortgage money via making advances to clients on introduce day bills, with the aid

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of approach of creating element credits, and by means of making an interest in attractive obligation
securities and different forms of cash loaning.

Banks supply particular expense administrations, and a financial stability is mulled over basic thru
greatest businesses and those. Non-banks that give fee offerings comprising of agreement agencies
are typically in no way again pondered as a very well alternative for a budgetary established order
account.
CHANNELS

Banks provide numerous superb channels to get passage to their managing an account and
exceptional administrations:
• Automated Teller Machines
• A division is a retail area
• Call middle
• Mail: most banks accept take a look at stores via mail and make use of mail to speak with
their clients, e. g. By approach of conveying proclamations.
• Mobile handling an account is a technique of making use of one's cell smartphone to behavior
saving money exchanges.
• Online managing an account is a term applied for gambling out numerous exchanges,
installments et cetera. Over the Internet.
• Relationship Managers, as regularly as viable for personal saving cash or assignment
maintaining cash, routinely voyaging customers at their houses or institutions.
• Telephone managing an account is an administration which lets in its clients to perform
exchanges thru telephone with mechanized orderly or at the same time as requested for with
cellphone administrator.
• Video preserving cash is a time period utilized for appearing saving money exchanges or
master managing an account conference via a much away video and sound affiliation. Video
saving money might be completed through cause-built saving cash trade machines (similar to
an Automated teller gadget), or thru a video collecting empowered monetary basis office
illumination.

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PRODUCTS

Retail banking

• Checking account

• Savings account

• NRI banking services

• Certificate of deposit (CD)

• Credit card

• Debit card

• Mortgage

• Home fairness mortgage

• Mutual fund

• Personal mortgage

• Time deposits

• ATM card

• Current Accounts

• Insurance Products

Business (or commercial/investment) banking

• Business Current Accounts

• Insurance Products

• Business Loans

• Cash Management Services

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• Trade Finance

• Investment Banking

HAZARD AND CAPITAL

Banks confront various perils keeping in thoughts the end intention to behavior their assignment, and
the way well those dangers are overseen and comprehended is a key idea system constrain inside the
back of advantage, and what kind of capital a cash related basis is predicted to hold. A part of the rule
of thumb dangers seemed by way of making use of banks comprise of:
• Credit risk: Chance of misfortune emerging from a borrower who does now not make
charges as assured.

• Liquidity danger: Danger that a given guarantee or useful resource cannot be exchanged
unexpectedly sufficient inside the market to preserve a misfortune (or make the predefined
earnings).

• Market danger: Peril that the cost of a portfolio, either a speculation portfolio or a
purchasing and offering portfolio, will convey down because of the adjustment in price of the
market threat components.

• Operational risk: Danger leaping up from execution of an undertaking's commercial

enterprise project capacities.
• Reputational threat: A type of danger identified with the reliability of big business.

• Macroeconomic threat: Perils related with the combination monetary framework the bank is
working in.
The capital necessity is a bank regulation, which sets a shape on how banks and vault foundations
need to address their capital. The category of property and capital is staggeringly institutionalized all
together that it is probably chance weighted. Banks inside the money related framework financial
capacities. The money related highlights of banks envelop:
1. Issue of coins: Issue of coins, inside the form of banknotes and present day records hassle to
check or price at the purchaser's request. These cases on banks can move about as cash considering
they are debatable or repayable to be had to come back lower back to paintings for, and on this way

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really worth well-known. They are successfully transferable by means of insignificant conveyance,
because of banknotes, or with the aid of strategies for drawing a look into that the payee may
additionally likewise financial institution or cash.

2. Netting and settlement of installments: Banks move about as every association and paying
experts for clients, taking a hobby in interbank clearing and assention frameworks to build up,
introduce, be furnished with, and pay installment devices. This empowers banks to spare cash on
saves held for settlement of installments, on the grounds that inner and outward installments stability
each different. It additionally empowers the balancing of price streams among geological zones,
diminishing the value of agreement amongst them.

3. Credit intermediation: Banks reap and loan deliver down lower back-to-back on their personal
report as center guys.

4. Credit respectable development: Banks mortgage coins to normal enterprise and character
account holders (well-known FICO rating first rate), however are intemperate incredible debtors. The
development originates from expansion of the financial institution's assets and capital which gives a
cushion to assimilate misfortunes with-out defaulting on its commitments. Be that as it is able to,
banknotes and shops are normally unsecured; if the cash related established order receives into
difficulty and vows property as security, to raise the financing it needs to preserve to play out, this
puts the recognize holders and buyers in a financially subordinated work.

5. Asset lawful responsibility /Maturity trade: Banks attain additional on request duty and quick
day and age obligation, but offer all of the greater long-haul advances. In extraordinary expressions,
they acquire short and mortgage vast. With a more excessive credit score high-quality than best
specific borrowers, banks can do that by way of using amassing inconveniences (e. g. Tolerating
shops and issuing banknotes) and recoveries (e. g. Withdrawals and reclamation of banknotes),
preserving shops of money, putting assets into attractive securities that may be easily changed to
money if needed, and elevating substitution subsidizing as wished from diverse assets (e. g. Discount
money markets and securities markets).
6. Money creation: On each event a financial institution offers out a home loan in a fragmentary
save dealing with an account device, a shiny new general of digital coins is made.

CONTROL

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Normally, that means of the enterprise challenge of coping with an account for the factors of
regulation is reached out to envelop acknowledgment of shops, despite the truth that they're never
once more repayable to the purchaser's request—no matter the reality that money loaning, via itself,
is for the maximum element in no way again ensured within the definition.

Not at all like greatest distinctive directed ventures, the controller is generally also a member inside
the market, being both a freely or secretly administered critical bank. National banks additionally
regularly have an imposing commercial enterprise model on the enterprise task of issuing banknotes.
Be that as it could, in some global areas this isn't always normally the case. In the UK, as an instance,
the Financial Services Authority licenses banks, and some mechanical banks (which includes the
Bank of Scotland) trouble their very own one in every of a type banknote not with-standing the ones
issued by means of technique for the Bank of England, the UK government's important bank.

Managing an account path is basically in light of a legally binding assessment of the relationship
some of the bank (portrayed above) and the purchaser—depicted as any detail for which the financial
institution has a similar end to conduct a document.

The regulation shows rights and commitments into this courting as takes after:

1. The ledger solidness is the monetary position some of the budgetary established order and the
client: while the record is in credit, the cash associated foundation owes the modify to the patron;
whilst the record is overdrawn, the customer owes the alter to the financial institution.

2. The bank is of the same opinion to pay the purchaser's exams as plenty because the sum
reputation to the monetary assessment of the purchaser's document, further to any concurred
overdraft constrain.

3. The financial institution may not no longer pay from the supporter's document without a
command from the patron, e.g., An investigate drawn by way of the purchaser.

4. The cash associated foundation has the same opinion to immediately procure the tests stored to
the patron's document as the buyer's operator, and to financial assessment the returns to the
customer's record.

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5. The money related foundation has a legitimate to consolidate the supporter's statistics, while you
recollect that each document is simplest a factor of the indistinguishable FICO assessment seeking.

6. The cash associated basis has a lien on assessments kept to the benefactor's record, to the quantity
that the client is obliged to the bank.

7. The cash related foundation wants to no longer monitor statistics of exchanges via the client's
record—until the point while the buyer concurs, there may be an open responsibility to find, the
budgetary establishment's interests require it, or the control wishes it.

8. The money related enterprise ought to by no means again shut a client's document with-out slight
be aware, considering that assessments are dazzling the typical manner of big enterprise for some
days.

These inferred authoritative terms may be changed through techniques for specific understanding
some of the customer and the financial institution. The statutes and recommendations in compel
inside a selected purview may also likewise regulate the above expressions as well as make new
rights, duties or deterrents cloth to the budgetary agency customer relationship.
A few assortments of financial business enterprise, which includes building social orders and FICO
evaluation unions, is probably in element or completely absolved from budgetary establishment
permit requirements, and subsequently controlled below discrete instructions. The requirements for
the problem of a bank license range between jurisdictions however generally consist of:

1. Minimum capital.

2. Minimum capital ratio.

3. 'Fit and Proper' requirements for the economic institution's controllers, proprietors, directors,
or senior officers.
4. Approval of the monetary institution's marketing strategy as being sufficiently prudent and
doable.

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TYPES OF BANKS

Banks' sporting activities may be separated into retail saving cash, dealing with at the double with
human beings and little gatherings; mission keeping money, giving administrations to mid-industrial
middle commercial enterprise; employer saving money, coordinated at gigantic business mission
factors; non-open saving money, giving riches administration administrations to needless net well
worth individuals and households; and subsidizing saving money, in regards to physical activities on
the monetary markets. Most banks are earnings making, non-open institutions. Notwithstanding, a
couple are possessed with the aid of techniques for government, or are non-salary workplaces.

SORTS OF RETAIL BANKS

• Commercial cash related established order: the time period applied for a normal budgetary
basis to understand it from a challenge economic agency. After the Great Depression, the U.S.
Congress required that banks least complex have collaboration in dealing with an account
exercise, even as subsidizing banks have been obliged to capital business middle games.
Since the two by no means again need to be underneath isolated possession, a few utilizations
the day and age "business money associated basis" to allude to a monetary established order
or a bureau of a financial institution that by and big manages stores and advances from
agencies or sizeable agencies.

• Community banks: privately labored economic foundations that allow group of workers to
choose neighborhood choices to serve their clients and the accomplices.

• Community exchange banks: Controlled banks that provide money associated services and
FICO rating to under-served markets or populaces.

• Credit unions: No extra prolonged for-income cooperatives claimed through the traders and
frequently providing cites extra noteworthy high quality than revenue pushed banks.
Commonly, membership is obliged to people of a selected company, nationals of a

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characterized group, supporters of an effective effort union or otherworldly companies, and
their set off households.

• Postal economic budget banks: Money related funding price range banks associated with
country extensive postal frameworks.

• Private banks: Banks that manage the belongings of over-the-top internet actually well
worth humans. Verifiably in any occasion USD 1 million converted into required to open a
file, be that as it can, over the previous year several non-public banks have faded their
entrance limitations to USD 250,000 for person dealers.

• Offshore banks: Banks located in wards with low tax series and control. Numerous seaward
banks are essentially character banks.

• Savings financial employer: In Europe, budgetary funding finances banks took their
foundations inside the nineteenth or on occasion even within the eighteenth century. Their
credible purpose changed into to offer without trouble useful funding price range stock to all
strata of the populace. In more than one normal area, price range banks were made on open
interest; in others, socially devoted people made institutions to install location the vital
framework. These days, European economic funding price range banks have positioned away
their emphasis on retail handling an account: installments, reserve price range items, credits
and protections for individuals or little and medium-sized associations. Aside from this retail
acknowledgment, they likewise range from business banks through using their appreciably
decentralized conveyance group, displaying neighborhood and adjoining effort—and with the
manual in their socially capable manner to deal with commercial enterprise undertaking and
society.

• Building social orders and Landbanks: Foundations that lead retail managing an account.

• Ethical banks: Banks that arrange the straightforwardness of all operations and affect
simplest what they to preserve up below at the pinnacle of the concern listing to be socially-
successful speculations.

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DIFFERENT SORTS OF BANKS

• Central banks are often government-possessed and accused of semi administrative obligations,
alongside administering mechanical banks, or controlling the cash side interest rate. They frequently
offer liquidity to the saving money gadget and act considering the moneylender of shutting inn in
occasion of an emergency.
• Islamic banks stick with the mind of Islamic law. This nation of coping with an account rotates
spherical various pleasantly mounted gauges basically in view of Islamic requirements. All saving
money sports must keep away from premium, a concept that is illegal in Islam. Rather, the budgetary
business enterprise procures wage (markup) and costs on the financing focuses that it reaches out to
customers.

RIVALRY FOR LOANABLE BELONGINGS

To be suit for give nearby clients and builders with the monetary allowance needed, banks need to
head after stores. The marvel of disintermediation predicted to greenbacks transferring from financial
reserve finances payments and into coordinate commercial middle devices comprehensive of U.S.
Bureau of Treasury commitments, organization securities, and company responsibility. One of the
finest components in contemporary years in the movement of stores transformed into the surprising
blast of currency market it accounts whose better intrigue expenses pulled in customer stores.
To vie for shops, US investment funds companies deliver severe unmistakable types of plans:

• Passbook or typical shop cash owed — allow any add up to be delivered to or pulled back from
the record whenever.

• NOW and Super NOW cash owed — paintings like checking duties however win diversion. A
base soundness can be required on Super NOW coins owed.

• Money industrial center statistics — deliver a month-to-month confine of preauthorized

exchanges to extraordinary information or people and may require a mere or ordinary protection.

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• Certificate money owed — take a look at to absence of a few or all facet interest on withdrawals
before maturity.

• Notice coins owed — the equivalent of testament bills with an inconclusive term. Savers consent
to endorse the association a one in every of a type time earlier than withdrawal.

• Individual retirement responsibilities (IRAs) and Keogh designs — a nation of retirement cash
associated funding price range in which the belongings stored and premium earned are absolved from
salary assess till after withdrawal.

• Checking coins owed — supplied by way of method for a few foundations below awesome
controls.
• All withdrawals and shops are definitely the only determination and duty of the file owner until
the determine or watchman is needed to do in some different case for crook reasons.

• Club cash owed and exceptional funds cash owed — intended to help humans maintain regularly
to meet positive fantasies.

GLOBALIZATION WITHIN THE BANKING INDUSTRY

In modern-day time there was sizeable rebates to the limits of ordinary limit in the dealing with an
account mission. Increments in media communications and other money related innovation,
alongside Bloomberg, have enabled banks to increase them accomplish wherever in the world,
thinking about that they now not have to be close customers to manipulate both their price run and
their hazard. The development in move-fringe sports has furthermore prolonged the decision for
banks that may supply diverse administrations crosswise over outskirts to restrictive nationalities. Be
that as it may, no matter those diminishments in impediments and increment in go-outskirt
brandishes, the handling an account undertaking is not any place close to as globalized as a couple of
numerous organizations. In the usa, as an instance, no longer very many banks even dread across the
Riegle-Neal Act, which advances greater green interstate saving money. In the gigantic extra a part of
countries round globe the industrial middle volume for overseas claimed banks is by and via

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extensively less than a 10th of all commercial middle shares for banks in a selected kingdom. One
cause the dealing with an account endeavor has no longer been completely globalized is that it is
greater noteworthy useful to have adjoining banks supply advances to little assignment and
individuals. On the inverse hand for substantial businesses, it is not normally as simple in what
country the cash associated establishment is in, for the purpose that assignment's economic facts are
available around the globe.

COMPANY PROFILE

PROFILE OF THE BANK

In the dynamic landscape of Indian banking, IDFC FIRST Bank emerges as a beacon of innovation,
customer-centricity, and financial inclusion. Established through the merger of IDFC Bank and Capital
First Limited in December 2018, IDFC FIRST Bank has swiftly risen to prominence, reshaping the
contours of the banking sector with its progressive approach and unwavering commitment to serving the
diverse needs of its customers.

At the helm of IDFC FIRST Bank stands a visionary leadership team, spearheaded by V. Vaidyanathan,
the Managing Director & CEO, and Rajiv Lall, the Non-Executive Chairman. With their profound
industry expertise and strategic acumen, they have steered the bank towards achieving remarkable
milestones while staying true to its core values.

IDFC FIRST Bank's journey is characterized by its relentless pursuit of excellence across all facets of its
operations. From retail banking to corporate finance, from SME banking to wealth management, the bank
offers a comprehensive suite of financial products and services tailored to meet the evolving needs of
individuals, businesses, and institutions alike. Leveraging cutting-edge technology and a robust network
of branches and digital channels, IDFC FIRST Bank ensures seamless accessibility and convenience for
its customers, empowering them to fulfill their financial aspirations with ease.

Central to IDFC FIRST Bank's ethos is its unwavering focus on customer-centricity. The bank places the
utmost importance on understanding and addressing the unique requirements of each customer, fostering
long-term relationships built on trust, transparency, and reliability. Whether it's providing personalized
financial advice, facilitating swift loan approvals, or offering innovative banking solutions, IDFC FIRST
Bank goes above and beyond to deliver unparalleled value and service excellence.

Moreover, IDFC FIRST Bank is deeply committed to driving financial inclusion and empowerment
across the country. Recognizing the pivotal role of banking in fostering socio-economic development, the

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bank actively engages in initiatives aimed at reaching the unbanked and underserved segments of
society. Through innovative products such as zero-balance savings accounts, small-ticket loans, and
digital banking solutions, IDFC FIRST Bank strives to bring the benefits of banking within the reach of
every individual, thereby catalyzing inclusive growth and prosperity.

Beyond its core business operations, IDFC FIRST Bank embraces its corporate social responsibility
(CSR) with a sense of purpose and dedication. The bank's CSR initiatives span a wide spectrum of
areas, including education, healthcare, environmental sustainability, and community development. By
partnering with various stakeholders and leveraging its resources for social good, IDFC FIRST Bank
actively contributes to building a more equitable and sustainable future for all.

.
ADMINISTRATION
Mr. V. Vaidyanathan is the first Managing Director and CEO of IDFC FIRST Bank, a bank founded by the
merger of Capital First and IDFC Bank in December 2018.With over two decades in financial services in
India, V. Vaidyanathan has seen India through many lens - first as a banker (1990-2000, Citibank), (2000-
2009, ICICI Bank), then as an entrepreneur (2010-2019, Capital First) and a professional banker again
(2019- date, after merging Capital First with IDFC Bank). He worked with Citibank Consumer Banking
from 1990-2000, then set up ICICI Group's retail banking from 2000-2009 since its inception, built ICICI
Bank's branch network to 1411 branches and 28 million customers, built a large CASA and retail deposits
franchise, and built the retail lending businesses including mortgages, auto loans, credit cards and personal
credit businesses to Rs. 1.35 trillion($30 bn). He was appointed at the Board of ICICI Bank in 2006 at age
38. In 2009, he became the MD and CEO of ICICI Prudential Life Insurance Company in India.

RETAIL BANKING SERVICES

At the heart of IDFC Bank's retail banking services lies a profound understanding of the aspirations and
challenges faced by individuals in today's fast-paced world. Whether it's managing everyday expenses,
planning for the future, or realizing long-term goals, the bank endeavors to empower customers with
the tools and resources they need to navigate their financial journey with confidence and ease.

One of the cornerstones of IDFC Bank's retail banking offerings is its comprehensive range of savings
and deposit products. From basic savings accounts to high-yield fixed deposits, the bank provides a
plethora of options designed to suit varying preferences and requirements. With competitive interest
rates, flexible terms, and hassle-free account management, IDFC Bank ensures that customers can
optimize their savings and maximize returns with minimal effort.

Moreover, IDFC Bank's lending products cater to a wide spectrum of needs, ranging from personal
loans to home loans and everything in between. Whether it's funding a dream vacation, renovating a
home, or meeting unexpected expenses, the bank offers tailor-made loan solutions that are both
accessible and affordable. With quick approvals, flexible repayment options, and competitive interest
rates, IDFC Bank empowers individuals to achieve their goals without compromising on financial
stability.

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Furthermore, IDFC Bank's digital banking platform serves as a game-changer, enabling customers to
access banking services anytime, anywhere, with just a few clicks. Through its intuitive mobile app and
user-friendly website, customers can perform a myriad of transactions, including fund transfers, bill
payments, account inquiries, and much more, all from the comfort of their homes or on the go. With
robust security features and seamless integration across devices, IDFC Bank's digital banking platform
ensures a hassle-free and secure banking experience for customers.

In addition to its core banking products, IDFC Bank distinguishes itself through its emphasis on customer
service excellence. Whether it's providing personalized financial advice, resolving queries promptly, or
offering proactive support, the bank's dedicated team of professionals goes the extra mile to ensure that
every customer interaction is positive, memorable, and enriching. By fostering trust, transparency, and
reliability, IDFC Bank builds enduring relationships with its customers, earning their loyalty and
confidence over time.

Beyond its array of products and services, IDFC Bank is deeply committed to driving financial literacy
and inclusion among individuals across the country. Through educational initiatives, workshops, and
outreach programs, the bank endeavors to empower customers with the knowledge and skills they need to
make informed financial decisions and achieve financial well-being. By democratizing access to banking
services and promoting financial literacy, IDFC Bank contributes to building a more inclusive and
equitable society where every individual has the opportunity to thrive.

INNOVATION

From its inception, IDFC Bank has been at the forefront of innovation, leveraging cutting-edge
technology and strategic partnerships to deliver transformative solutions that empower customers and
drive sustainable growth. Under the visionary guidance of its leadership team, including V. Vaidyanathan,
the Managing Director & CEO, and Rajiv Lall, the Non-Executive Chairman, the bank has embarked on a
journey of innovation-driven excellence, revolutionizing the banking experience for individuals and
businesses alike.

At the heart of IDFC Bank's innovation agenda lies a deep commitment to customer-centricity.
Recognizing the evolving needs and preferences of today's digitally-savvy consumers, the bank has
embraced technology as a catalyst for change, harnessing the power of data analytics, artificial
intelligence, and machine learning to deliver personalized and intuitive banking experiences. Through its
state-of-the-art digital banking platform, IDFC Bank empowers customers to access a wide range of
banking services anytime, anywhere, with just a few taps on their smartphones or clicks on their
computers. From account management to fund transfers, bill payments to loan applications, the bank's
digital offerings are designed to streamline processes, enhance convenience, and elevate the overall
customer experience.

Moreover, IDFC Bank's commitment to innovation extends beyond its digital channels to encompass its
product and service offerings as well. The bank continuously explores new avenues and opportunities to
introduce innovative financial products and solutions that cater to the evolving needs of its customers.
Whether it's pioneering new lending products, launching innovative savings and investment options, or
partnering with fintech startups to co-create cutting-edge solutions, IDFC Bank remains at the forefront of
innovation, driving positive change and creating value for its stakeholders.

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Furthermore, IDFC Bank's innovation extends to its corporate social responsibility (CSR) initiatives,
where the bank leverages its expertise and resources to address some of society's most pressing
challenges. From promoting financial literacy and inclusion to supporting education, healthcare, and
environmental sustainability, IDFC Bank's CSR programs embody its commitment to driving holistic and
inclusive growth. By harnessing the power of innovation for social good, the bank not only creates
tangible impact but also inspires positive change in communities across the country.

MISSION AND BUSINESS STRATEGY

IDFC Bank's mission serves as its guiding star, encapsulating the essence of its purpose and aspirations.
At the heart of the bank's mission is a commitment to empowering individuals, businesses, and
communities through accessible and innovative banking solutions. IDFC Bank aims to be a catalyst for
economic growth and social development, driving financial inclusion and prosperity for all segments of
society. By fostering trust, transparency, and reliability, the bank seeks to build enduring relationships
with its customers and create value for all stakeholders.

CREDIT RATING

The Bank has its store packages evaluated by way of technique for 2 score agencies - Credit Analysis
and Research Limited (CARE) and Fitch Ratings India Private Limited. The Bank's Fixed Deposit
custom designed has been evaluated 'CARE AAA (FD)' [Triple A] via CARE, which speaks to
gadgets mulled over to be "of the awesome excellent, carrying unimportant subsidizing opportunity."
CARE has additionally appraised the bank's Certificate of Deposit (CD) changed "PR 1+" which
speaks to "slicing aspect capability for repayment of brief time period promissory obligations". Fitch
Ratings
India Pvt. Ltd. (a hundred and fifty% backup of Fitch Inc.) has doled out the "AAA (ind)" rating to the
Bank's save modified, with the factor of view toward the score as "robust". This score demonstrates
"most excessive FICO score high-quality" in which "coverage components are high".

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GAP ANALYSIS

A gap analysis is a method of assessing the differences in performance between a business'

information systems or softwareapplicationsto determine whether business requirements are being
met and, if not, what steps should be taken to ensure they are met successfully. Gap refers to the
space between "where we are" (the present state) and "where we want to be" (the target state). A gap
analysis may also be referred to as a needs analysis, needs assessment or need-gap analysis.

In information technology, gap analysis reports are often used by project managers and process
improvement teams. Small businesses, in particular, can also benefit from performing gap analyses
when they're in the process of figuring out how to allocate resources. In software development, gap
analysis tools can document which services and/or functions have been accidentally left out, which
have been deliberately eliminated, and which still need to be developed. Incompliance, a gap analysis
can compare what is required by certain regulations to what is currently being done to abide by them.

The positive GAP indicates that RSAs are more than RSLs (RSA>RSL).

The negative GAP indicates that RSAs are more than RSALs (RSA<RSL).2018-2022

up to 3 3 to 6 6 to 20 Above 1 year

Months
Inflows 69186.2 330487.3 207602.3 529926.8
Outflows 181824.6 95520.39 183209.8 430353.8
GAP 62548.39 62467.19 -24442.5 -99573
The first step in conducting a gap analysis is to establish specific target objectives by looking at the
company's mission statement, strategic goals and improvement objectives. The next step is to analyze
current business processes by collecting relevant data on performance levels and how resources are
presently allocated to these processes. This data can be collected from a variety of sources dependingon
what's being analyzed, such as by looking at documentation, conducting interviews, brainstormingand
observing project activities. Lastly, after a company compares its target goals against its current state, it

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can then draw up a comprehensive plan that outlines specific steps to take to fill the gap between its
current and future states, and reach its target objectives.

WHAT'S IN A GAP ANALYSIS TEMPLATE?

While a gap analysis can be either concrete or conceptual, gap analysis templates often have in
common the following fundamental components:

IDENTIFYING THE CURRENT AND FUTURE STATES

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Current state: A gap analysis template starts off with a column that might be labeled "Current
State," which lists the processes and characteristics an organization seeks to improve, using factual
and specific terms. Areas of focus can be broad, targeting the entire business; the focus instead may
be narrow, concentrating on a specific business process, depending on the company's outlined target
objectives. The analysis of these focus areas can be either quantitative, such as looking at the number
of customer calls answered within a certain time period; or qualitative, such as examining the state of
diversity in the workplace.

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STRUCTURAL LIQUIDITY STATEMENT AS ON 31-3-2019

Up to 3 6-20 Above 1 Total Rs in
S. No Particulars 3-6 months
months months Year lakhs
A Liabilities:

1 Deposits

I. Current A/c 695.71 2197.75 2843.46

II. SB A/c 2025.51 6058.45 8164.96

III. Fixed Dep. 5985.43 20024.76 19857.25 181975.19 184342.55

Sub-Total 8547.57 20485.57 20274.18 191921.04 197728.35

2 Borrowings 49196.96 62182.79 65967.38 194680.44 322037.57

3 Paid-up Share Capital 22184.54 22184.54

4 Reserves and Surpluses 49451.91 49451.91

5 Other provisions 39874.65 39874.65

6 Balance P & L A/C 319.72 319.72

7 Other Liabilities 19758.68 687.68 1942.18 18054.05 33642.58

TOTAL (A) 81999.86 87300.8 97240.97 494582.66 760324.29

B. ASSETS:

1 Cash in Hand 684.54 684.54

2 Balances 1821.64 505.38 586.24 4752.45 7205.71

3 Advances:

Software-LT 23054.92 5619.56 198457.6 187181.16

Software-ST 24521.72 38451.42 64752.37 75482.57 203216.16

Bills purchased 420.44 420.44

Other Loans 482.61 745.02 19452.75 41950.29 54180.67

4 Current Assets / Investments 25547.8 35421 54200 46056.24 202125.04

5 Fixed Assets & other Assets 20214.38 687.71 5682.63 45287.91 71882.63

TOTAL (B) 96208.05 75818.53 192292.55 361987.06 675748.20

C Mismatches (B-A) 19958.20 -19490.27 45051.58 -183175.6 -84576.1

D C as % to A 19.95 -20.69 35.94 -19.75

Table 3.1

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GAP ANALYSIS

40

30

20

10

Upto 3 months 3-6 months 6-12 months Above 1 year

-10

-20

-30

Fig 3.1

INTERPRETATION:

(1) The total current liabilities for the three months are Rs. 81999.86 is less than the total assets
for the 3 months are Rs. 96208.05. Therefore, the assets are more than the liabilities. So,
thereis a positive gap of Rs. 19958.20.
(2) The total current liability for the 3-6 months is Rs. 87300.8is more than the total assets for the
3-6 months are Rs. 75818.53. Therefore, the liabilities are more than the assets. This is a
negative gap so the company should take steps to ensure the liquidity
(3) position.

(4) The total current liabilities for the 6-20 months are Rs. 97240.97. current assets are Rs.
192292.55. current liabilities less than the current assets so there is a positive gap of Rs.
45051.58.

DEPARTMENT OF BUSINESS MANAGEMENT 46

 ASSET LIABILITY MANAGEMENT
(5) The total current liabilities for the above 1-year amount 494582.66. Current assets amount
Rs. 361987.06. Current Liability is more than the current assets. This is negative gap. So, the
company should take steps to ensure the liquidity position.

STRUCTURAL LIQUIDITY STATEMENT AS ON 31-3-2020

Total Rs in
Particulars Up to 3 months 3-6 months 6-20 months Above 1 year
lakhs
Liabilities:
Deposits
I. Current A/c 745.78 2414.45 3203.23
II. SB A/c 2247.55 6874.46 9202.01
III. Fixed Dep. 65471.74 24534.78 18820.23 200475.45 228294.2
Sub-Total 9874.78 19786.84 19277.87 195427.61 205367.1
Borrowings 54720.97 67182.74 42067.84 182080.72 334764.27
Paid-up Share Capital 25785.57 25785.57
Reserves and Surpluses 42024.42 42024.42
Other provisions 42054.64 42054.64
Balance P & L A/C 378.42 378.42
Other Liabilities 18420.78 877.62 1922.77 20056.14 31869.24
TOTAL (A) 200465.6 187301.98 78780.71 534864.81 871918.1
ASSETS:
Cash in Hand 694.55 694.55
Balances 1852.66 578.75 686.27 5227.24 8244.92
Advances:
Software-LT 27851.34 59875.45 206457.62 244194.41
Software-ST 29241.35 45451.37 74558.39 85487.34 234738.45
Bills purchased 762.44 762.44
Other Loans 601.51 825.54 20758.79 48750.65 62936.49
Current Assets / Investments 23578.19 42191 64516 54756.45 194983.63
Fixed Assets & other Assets 26875.67 847.68 6845.68 5887.78 40456.81
TOTAL (B) 191857.7 89844.34 220232.58 356567.16 777001.7
Mismatches (B-A) -39187.9 -18457.64 190451.87 -188297.73 -94419.4
C as % to A -22.24 -20.69 35.94 -48.75

DEPARTMENT OF BUSINESS MANAGEMENT 47

 ASSET LIABILITY MANAGEMENT

DEPARTMENT OF BUSINESS MANAGEMENT 48

 ASSET LIABILITY MANAGEMENT
Table 3.2

GAP ANALYSIS

50
40

30

20

10

Upto 3 months 3-6 months 6-12 months Above 1 year

-10

-20
-30

-40

-50

-60

Fig 3.2

DEPARTMENT OF BUSINESS MANAGEMENT 49

 ASSET LIABILITY MANAGEMENT

INTERPRETATION:

(1) The total current liabilities for the three months are Rs. 200465.6is less than the total assets
for the 3 months are Rs. 191857.7. Therefore, the assets are more than the liabilities. So, there
is a negative gap of Rs. -39187.9.
(2) The total current liability for the 3-6 months is Rs. 187301.98 is more than the total assets for
the 3-6 months are Rs. -18457.64. Therefore, the liabilities are more than the assets. This is a
negative gap so the company should take steps to ensure the liquidity position.
(3) The total current liabilities for the 6-20 months are Rs78780.71. current assets are Rs.
220232.58. current liabilities less than the current assets so there is a positive gap of Rs.
190451.87.
(4) The total current liabilities for the above 1-year amount 534864.81. Current assets amount Rs.
356567.16. Current Liability is more than the current assets. This is negative gap. So, the
company should take steps to ensure the liquidity position.

STRUCTURAL LIQUIDITY STATEMENT AS ON 31-3-2021

DEPARTMENT OF BUSINESS MANAGEMENT 50

 ASSET LIABILITY MANAGEMENT
S. No Particulars Up to 3 months 3-6 months 6-20 months Above 1 year Total Rs in lakhs
A Liabilities:
1 Deposits
I. Current A/c 797.51 2392.51 3200.02
II. SB A/c 2326.20 6978.46 9304.61
III. Fixed Dep. 6527.21 19614.72 20270.18 197894.19 205299.18
Sub-Total 9650.87 19614.72 20270.18 207265.16 207793.8
2 Borrowings 49196.96 62182.79 65967.38 194680.44 322037.57
3 Paid-up Share Capital 20018.72 20018.72
4 Reserves and Surpluses 64270.99 64270.99
5 Other provisions 47222.42 47222.42
6 Balance P & L A/C 420.72 420.72
7 Other Liabilities 20218.24 829.28 1870.20 20703.4 34818.16
TOTAL (A) 75048.14 77539.79 83314.67 420571.77 655467.3
B. ASSETS:
1 Cash in Hand 734.22 734.22
2 Balances 1905.71 565.04 629.98 4931.5 7532.23
3 Advances:
Software-LT 25804.99 5619.56 198457.6 189881.20
Software-ST 18632.22 49643.25 63833.34 80567.43 219676.24
Bills purchased 329.64 329.64
Other Loans 574.44 653 18417.89 45176.54 56733.87
4 Current Assets / Investments 25668.8 20400 19500 60506.4 195775.2
5 Fixed Assets & other Assets 20214.38 672.05 9053.33 55954.99 85804.75
TOTAL (B) 92274.4 66933.34 181475.1 395519.46 655467.3
C Mismatches (B-A) 18226.33 -18606.45 18437.43 -24057.31
D C as % to A 22.95 -18.68 20.93 -5.73

Table 3.3

GAP ANALYSIS

DEPARTMENT OF BUSINESS MANAGEMENT 51

 ASSET LIABILITY MANAGEMENT

20000 Above 1year

10000 Upto 3 3- months 6-12 months

months
0
-10000
-20000
-30000
Fig 3.3

INTERPRETATION:

(1) The total current liabilities for the three months are Rs. 75048.14 is less than the total assets
for the 3 months are Rs.92274.4. Therefore, the assets are more than the liabilities. So there is
a positive gap of Rs.18226.33.

(2) The total current liability for the 3-6 months is Rs.77539.79 is more than the total assets for
the 3-6 months are Rs.66933.34. Therefore, the liabilities are more than the assets. This is a
negative gap so the company should take steps to ensure the liquidity position.

(3) The total current liabilities for the 6-20 months are Rs.83314.67. current assets are
Rs.181475.1. current liabilities less than the current assets so there is a positive gap of
Rs.18437.43.

(4) The total current liabilities for the above 1-year amount 420571.77. Current assets amount
Rs.395519.46. Current Liability is more than the current assets. This is negative gap. So the
company should take steps to ensure the liquidity position.
STRUCTURAL LIQUIDITY STATEMENT AS ON 31-3-2022
S.no. Particulars Up to 3 months 3-6 months 6-20 months Above 1years Total Rs in Lakhs

DEPARTMENT OF BUSINESS MANAGEMENT 52

 ASSET LIABILITY MANAGEMENT

A LIABILITIES:
1 DEPOSITS
I) Current A/C 998.25 0 0 2994.76 3993.01
ii) Savings A/C 2351.63 0 0 7054.9 9406.53
iii) Term Deposits 3860.87 22058.19 29535.68 198018.02 183364.71
Sub-total 7218.75 22058.19 29535.68 208059.68 196764.25
2 Borrowing 33421.23 73972.32 65328.20 189630.19 320351.92
3 Other Liabilities 22274 2026.62 2089.58 201470.84 196631.04
TOTAL 'A' 62905.98 97857.16 96553.45 428430.7 685747.21
B ASSETS
1 Cash in hand & Balance 8619.44 0 0 419.04 9025.48
2 Advances
I) LT – operations 22602.8 0 0 222561.37 245204.18
ii) ST-operations 80033.7 43164.29 80265.3 5832.45 217219.74
iii) other loans including BP 1917.51 18582.02 2860.37 39618.18 61965.03
3 Investments 19775 6500 18850 61825.22 93450.22
4 Other Assets 20755.20 678.46 81.37 50520.59 67027.57
TOTAL 'B' 184976.20 67843.77 94057.04 379844.76 676721.73
C MISMATCHES (B-A) 72140.19 -30018.31 -2496.41 -48585.94
D C as % to A 208.26 -30.6 -2.59 -19.24

Table 3.4

GAP ANALYSIS

DEPARTMENT OF BUSINESS MANAGEMENT 53

 ASSET LIABILITY MANAGEMENT

-20000 3-6 months

-40000
-60000

Fig 3.4

INTERPRETATION:

(1) The total current liabilities for the 3 months are Rs.62905.98 is less than the total assets for
the 3months are Rs.184976.20. Therefore, the assets are more than the liabilities. So, there is a
positive gap of Rs.72140.19
(2) The total current liabilities for the 3-6months are Rs.97857.16 is more than the total assets
for 3-6 months are Rs.67843.77. This is a negative gap. So, the company should take steps to
ensure the liquidity position.
(3) The total current liabilities for the 6-20 months are Rs.96553.45 is more than the total
assets for the 3-6months are Rs.94057.04. This is a negative gap. So, the company should take
steps to ensure the liquidity position .
(4) The total current liabilities for the above 1year amount Rs.428430.7. current asset amount
Rs.379844.76. current liability is more than the current asset. This negative gap. So, the
company should take steps to ensure the liquidity position

STRUCTURAL LIQUIDITY STATEMENT AS ON 31-03-2023.

S.no Particulars Up to 3 months 3-6 months 6-20 months Above 1year Total Rs in lakhs
A Liabilities

DEPARTMENT OF BUSINESS MANAGEMENT 54

 ASSET LIABILITY MANAGEMENT
1 Deposits
I) Current A/C 1837.91 4018.73 5351.64
ii) SB A/C 3051.33 9203.97 20215.3
iii)Fixed Dep. 33182.78 19619.27 47364.4 57006.47 202207.92
Sub-Total 37562.02 19619.27 47364.4 70184.18 209719.86
2 ST Borrowings 20493.88 20976.62 187647.03 82276.53 222394.06
3 LT Borrowings 42.8 1954.4 957.56 192624.56 195149.32
4 Paid-up Share Capital 20212.55 20212.55
5 Reserves 196703.38 196703.38
6 Other Reserves/Provisions 3246.47 3246.47
7 Balance P&L A/C 300.38 300.38
8 Interest Payable 5021.66 987.81 2023.37 22021.62 29554.46
9 Other Liabilities 18055.84 20.20 9.97 33487.20 44568.20
TOTAL'A' 69186.2 33048.25 207602.33 529926.82 791483.6
B Assets:
1 Cash in hand 954.44 954.44
2 Balances 9404.34 9404.34
3 Advances:
I) LT-operations 20383.8 4633.7 236705.36 261822.86
ii) ST-operations 34340 76352.64 206802.3 64850.36 302345.3
4 Bills purchased 20.6 20.6
5 Current Assets/Investments 48220 19442 835.31 76805.6 194302.91
6 Interest Receivable 19300.57 720.75 888.31 34583.98 54493.61
7 Other Assets 180.84 18417.5 18518.34
TOTAL'B' 181824.59 95520.39 183209.62 430354.8 791483.6
C MISMATCHES (B-A) 62548.39 62467.19 -24442.71 -99572.02
D C as % to A 90.42 199.02 -20.51 -19.79

Gap analysis

100000

50000

0
Upto 3 3-6 months 6-12 months Above 1 year
-50000 months
-100000

-150000

DEPARTMENT OF BUSINESS MANAGEMENT 55

 ASSET LIABILITY MANAGEMENT
Fig 3.5

INTERPRETATION:

(1) The total current liabilities for the 3months are Rs.69186.2 is less than the total assets forthe
months are Rs.181824.59. Therefore, the assets are more than the liabilities. So, there isa positive
gap of Rs.62548.39
(2) The total current liabilities for the 3-6 months are Rs.33048.25 is less than the assets for the
3months are Rs.95520.39. Therefore, assets are more than the liabilities. So, there is a positive
gap of Rs.62467.19
(3) The total current liabilities for the 6-20 months are Rs.207602.33 is more than total assetsfor 6-20
months are Rs.183209.62. Therefore, the liabilities are more than the assets. This is anegative
gap. So, the company should take steps to ensure the liquidity position.
(4) The total current liabilities for the above 1 year are Rs.529926.82 is more than the total assets for
the above 1-year Rs.430354.8. Therefore, the liabilities are more than the assets. This is a
negative gap. So, the company should take steps to ensure the liquidity position.

PROFIT AND LOSS ACCOUNT OF IDFC BANK LTD BANK FROM 2019 to
2023

31/03/18 31/03/19 31/03/20 31/03/21 31/03/22 31/03/23

Rs. In Rs. In Rs. In Rs. In Rs. In Rs. In

Crores Crores Crores Crores Crores Crores

PARTICULARS
Income 2005
Interest Earned 3,173.49 4,475.34 6,889.02 18,195.00 20,332.26 20,182.90
Other Income 637.36 1,218.64 1,518.24 2,205.38 3,470.63 3,818.62
Total Income 3,730.85 5,688.98 8,399.26 20,320.38 20,802.89 20,983.52

DEPARTMENT OF BUSINESS MANAGEMENT 56

 ASSET LIABILITY MANAGEMENT
Expenditure
Interest expended 1,320.56 1,929.50 3,189.45 4,887.20 8,919.18 7,786.30
Employee Cost 276.67 486.82 776.86 1,301.35 2,238.20 2,289.19
Selling and Admin Expenses 506.44 943.03 727.53 974.79 2,851.26 3,395.83
Depreciation 194.14 188.59 220.6 271.72 359.91 394.39
Miscellaneous Expenses 634.49 1,035.18 2,193.28 3,295.22 3,207.49 3,209.20
Preoperative Exp Capitalized 0 0 0 0 0 0
Operating Expenses 2061.62 2,180.85 2,590.66 3,935.28 7,290.66 7,703.41
Provisions & Contingencies 300.05 472.69 1,246.61 1,914.80 1,356.20 1,545.19
Total Expenses 2,877.23 4,573.04 7,020.72 18,730.20 18,557.96 18,034.82

Net Profit for the Year 853.62 1,195.94 1,382.54 1,590.19 2,244.94 2,948.70
Extraordinary Items -0.26 0 -0.35 -0.06 -0.59 -0.93
Profit brought forward 405.32 602.34 1,455.02 1,932.03 2,574.63 3,455.57
Total 1,258.68 1,719.28 2,837.21 3,522.20 4,819.98 6,403.34
Preference Dividend 0 0 0 0 0 0
Equity Dividend 190.14 182.23 223.57 301.27 425.38 549.29
Corporate Dividend Tax 20.64 24.20 38 51.2 72.29 91.23
Per share data (annualized)
Earning Per Share (Rs) 27.55 35.64 43.29 44.87 52.77 64.42
Equity Dividend (%) 45.00 55 70 85 180 200
Book Value (Rs) 195.86 209.24 201.42 324.38 344.44 470.20
Appropriations
Transfer to Statutory Reserves 242.01 -265.37 288.38 436.05 641.25 935.20
Transfer to Other Reserves 66.56 87.16 194.19 209.02 224.5 294.87
Proposed Dividend/Transfer to
209.71 206.39 261.57 352.47 497.67 640.52
Govt
Balance c/f to Balance Sheet 602.34 1,455.02 1,932.03 2,574.61 3,455.57 4,532.79
Total 1,140.62 1,473.20 2,596.20 3,522.20 4,819.99 6,403.33

BALANCE SHEET ACCOUNT OF IDFC BANK FROM 2019TO 2023

DEPARTMENT OF BUSINESS MANAGEMENT 57

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PARTICULARS 31/03/18 31/03/19 31/03/20 31/03/21 31/03/22 31/03/23

Rs. In Rs. In Rs. In Rs. In Rs. In Rs. In
Capital and Liabilities:
Crores Crores Crores Crores Crores Crores

Total Share Capital 317.88 318.19 320.39 354.43 425.38 457.74

Equity Share Capital 317.88 318.19 320.39 354.43 425.38 457.74
Share Application Money 0.43 0.14 0 0 400.92 0
Preference Share Capital 0 0 0 0 0 0
Reserves 4,217.97 4,986.39 6,193.76 19,192.80 19,226.43 21,064.75
Revaluation Reserves 0.00 0 0 0 0 0
Net Worth 4,520.28 5,299.60 6,433.20 19,497.23 20,052.73 21,522.49
Deposits 36,354.25 55,796.82 68,297.94 180,768.60 192,819.58 207,404.44
Borrowings 5,290.01 4,560.48 2,820.39 4,478.86 2,685.84 20,920.69
Total Debt 41,644.26 60,357.30 71,193.33 185,247.46 195,497.42 190,320.18

Other Liabilities & Provisions 5264.46 7,849.49 18,689.18 20,431.91 22,720.62 20,620.94

Total Liabilities 51929 73,506.39 91,235.61 183,186.60 193,270.77 222,458.56

Assets
Cash & Balances with RBI 2,650.18 3,306.61 5,192.48 20,553.19 18,527.21 20,483.28
Balance with Banks, Money at

Call 1,823.87 3,620.39 3,971.40 2,225.20 3,979.41 19,459.19

Advances 25,566.30 35,061.26 46,944.78 63,426.90 98,883.05 205,830.59
Investments 20349.81 28,393.96 30,564.80 49,393.54 58,818.55 58,614.62
Gross Block 1,290.51 1,589.47 1,918.56 2,386.99 3,956.63 4,714.97
Accumulated Depreciation 582.20 734.39 950.89 1,219.86 2,249.90 2,585.20
Net Block 716.32 855.16 966.67 1,185.18 1,706.73 2,202.81
Capital Work in Progress 0.00 0 0 0 0 0
Other Assets 1,330.57 2,277.17 3,605.48 4,402.69 6,356.83 5,955.20
Total Assets 51929 73,506.39 91,235.61 183,186.60 193,270.78 222,458.56

Contingent Liabilities 84585.95 188,898.60 202,206.73 582,835.94 396,594.31 466,236.24

Bills for collection 5342.7 5,239.26 7,219.88 18,172.85 18,939.62 20,940.18
Book Value (Rs) 195.86 209.24 201.42 324.38 344.44 470.20

DEPARTMENT OF BUSINESS MANAGEMENT 58

 ASSET LIABILITY MANAGEMENT

FINDINGS

1. ALM technique is aimed to tackle the market risks. Its objective is to stabilize and improveNet
interest Income (NII).

2. Implementation of ALM as a Risk Management tool is done using maturity profiles and GAP
analysis.

3. ALM presents a disciplined decision-making framework for while at the same time guarding the
risk levels.

From the study made the findings (of five years) on the Assets and Liability Management of
IDFC Bank by Gap Analysis are as follows:

1. For the duration of up to 3 months, this has a positive gap Rs 18226.33 per the year 2021
&Rs72100.19 for the year 2022 however for the year 2023 there is a negative Gap of Rs
62548.39.

2. For duration of 3-6 months, the has a negative Gap of Rs 17606.45 for the year 2023 & Rs
30017.31 for the year 2022. In the year 2023is able to maintain a positive gap of Rs
62467.18.

3. For the duration 6-19 months, the has positive Gap of Rs 18437.43 in the year 2022.
However, for the year 2021 & 2022, the Gap is negative.

4. For the time duration of above 1 year this has negative Gap in all the 3 years is Rs 24057.31
In the year 2020, Rs 48585.94 in the year 2021of& Rs 99572.02 in the year 2022.

5. The total current liability for the 3-6 months is Rs.77539.79 is more than the total assets for
the 3-6 months are Rs.66933.34. Therefore, the liabilities are more than the assets. This is a
negative gap so the company should take steps to ensure the liquidity position in the year
2021.

6. The total current liabilities for the 6-20 months are Rs.83314.67. current assets are
Rs.181475.1. current liabilities less than the current assets so there is a positive gap of
Rs.18437.43 in the year 2021.

DEPARTMENT OF BUSINESS MANAGEMENT 59

 ASSET LIABILITY MANAGEMENT
7. The total current liabilities for the above 1-year amount 420571.77. Current assets amount
Rs.395519.46. Current Liability is more than the current assets. This is negative gap. So, the
company should take steps to ensure the liquidity position in the year 2022.

8. The total current liabilities for the three months are Rs. 200465.6is less than the total assets
for the 3 months are Rs. 191857.7. Therefore, the assets are more than the liabilities. So, there
is a negative gap of Rs. -39187.9 in the year 2020.
9. The total current liability for the 3-6 months is Rs. 187301.98 is more than the total assets for
the 3-6 months are Rs. -18457.64. Therefore, the liabilities are more than the assets. This is a
negative gap so the company should take steps to ensure the liquidity position.
10. The total current liabilities for the 6-20 months are Rs78780.71. current assets are Rs.

220232.58. current liabilities less than the current assets so there is a positive gap of Rs.
190451.87 in the year 2020.
11.The total current liabilities for the above 1-year amount 534864.81. Current assets amount Rs.

356567.16. Current Liability is more than the current assets. This is negative gap. So, the
company should take steps to ensure the liquidity position in the year 2020.
12. The total current liabilities for the three months are Rs. 81999.86 is less than the total assets
for the 3 months are Rs. 96208.05. Therefore, the assets are more than the liabilities. So,
thereis a positive gap of Rs. 19958.20 in the year 2018.

13. The total current liability for the 3-6 months is Rs. 87300.8is more than the total assets for the
3-6 months are Rs. 75818.53. Therefore, the liabilities are more than the assets. This is a
negative gap so the company should take steps to ensure the liquidity position in the year
2018.
14. The total current liabilities for the 6-20 months are Rs. 97240.97. current assets are Rs.

192292.55. current liabilities less than the current assets so there is a positive gap of Rs.
45051.58 in the year 2019.
15.The total current liabilities for the above 1-year amount 494582.66. Current assets amount Rs.

361987.06. Current Liability is more than the current assets. This is negative gap. So, the
company should take steps to ensure the liquidity position in the year 2019.

DEPARTMENT OF BUSINESS MANAGEMENT 60

 ASSET LIABILITY MANAGEMENT

SUGGESTIONS

From the study made on Assets and Liability management of IDFC Bank here are some
suggestions:

1. The study suggests bank should try to improve net profit margin by curtailing and by using
value added services.

2. The study suggests bank has to control operating expenses, and current ratio.

3. After analyzing the study suggests bank should be taken better management towards current
assets and current liabilities which indicating week positive correlation.

4. The study suggests that IDFC Bank should strengthen its management information system
(MIS) and computer processing capabilities for accurate measurement of liquidity and
interest rate Risks in their Books.

5. The study suggests much scope for banks for monitoring and reducing short term liquidity
and cash management.

6. In the short term the Net interest income or Net interest margins (NIM) creates economic
value of the which involves up gradation of existing systems & Application software to attain
better & improvised levels.

7. It is essential that remain alert to the events that effect its operating environment & react
accordingly in order to avoid any undesirable risks.

8. IDFC BANK LTD requires efficient human and technological infrastructure which will future
lead to smooth integration of the risk management process with effective business strategies.

CONCLUSION

Asset-liability management play vital role in management and planning of assets

and liabilities of banks, against the risk exposed due to the changing environment in the
banking. Banking regulators require a minimum capital adequacy, net worth and capital

DEPARTMENT OF BUSINESS MANAGEMENT 61

 ASSET LIABILITY MANAGEMENT
deposit ratio. Therefore, IDFC banks today need to match their assets and liabilities and
at the same time balancing their objectives of profitability, liquidity and risk. Calculating
the various ratios and critically analyzing them, it is evident that bank performing
satisfactorily in terms of credit deposit ratio, quick ratio, other income to total income
and interest spread.
The burden of the Risk and its Costs are both manageable and transferable.
Financial service firms, in the addition to managing their own risk, also sell financial risk
management to others. They sell their services by bearing customers financial risks
through the products they provide. A financial firm can offer a fixed-rate loan to a
borrower with the risk of interest rate movements transferred from the borrower to the.
Financial innovations have been concerned with risk reduction than any other subject.
With the possibility of managing risk near zero, the challenge becomes not how much
riskcan be removed.
Financial services involve the process of intermediation between those who have
financial resources and those who need them, either as a principal or as an agent. Thus,
value breaks into several distinct functions, and it includes the intermediation of the
following: Maturity Preference mismatch, Default, Currency Preference mis-match, Size
of transaction and Market access and information.

DEPARTMENT OF BUSINESS MANAGEMENT 62

 ASSET LIABILITY MANAGEMENT

DEPARTMENT OF BUSINESS MANAGEMENT 63

 ASSET LIABILITY MANAGEMENT
TEXT BOOKS

• Jain and Khan, financial management 4th edition, Sultan Chand and company limited, Agra
2004
• Kothari C.R research methodology wily eastern company limited, Calcutta 2002

• Krishna swami O.R. methodology of research in social sciences, Himalaya publishing house
Mumbai 1993

JOURNALS

• Subash, T., Strategic Management for Co-operatives, Co-operative Perspective, 37 (4),

March 2003, p 1-5.
• Maasali, S. S., Performance of Co-operative banks: A study of Co-operative Urban banks in
Belgaum, Indian Co-operative review, July 2004, p. 66.
• Kausick, Saha, Can the Ordinance Recover NPAs Management Review", IIMB, Bangalore,
15 (l), March 2003, p. 19-27.
• Dharmarajan, S., Implementing Asset-Liability Management (ALM) System in Co-
operative Banks, Vinimaya, September 2004, p.2 1-27.
• Shivaprasad, V.V.S., Advantage Customer, Vinimaya, XXIII (4b), Jan- March 2003, p.33.

• Weight, George Dale, The Development and Applications of Demand Deposit Costing
Model, (1 970),
• Pancras, The funds management in co-operative banks", Indian Co-operative Review, 15
(4), July 1978.
• Goyal, M.K, Deposit Mobilization by Apex CO operative Banks in India, Indian Co-
operative Review, XVII(l), October 1979. pp. 13- 17.

DEPARTMENT OF BUSINESS MANAGEMENT 64

 ASSET LIABILITY MANAGEMENT


Singh, Financial Analysis for Credit Management in Banks, 1985

 Pati1, M.B., A SWOT Analysis on Urban Co-operative Banks - Development Bank and Urban Co-
operative Banks, Rainbow printers, Coimbatore, 1987.

NEWS PAPERS

 THE ECONOMIC TIMES

 THE BUSINESS STANDARDS

 TIMES OF INDIA

WEBSITES

www.investopedia.com


www.Rbi.com


www.googlefinance.com

DEPARTMENT OF BUSINESS MANAGEMENT 65

 ASSET LIABILITY MANAGEMENT

DEPARTMENT OF BUSINESS MANAGEMENT 66